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Task 3: Pre-define units of payment

The third task is to identify possible units of payment based on the services rendered by the chemicals.

As previously noted, Chemical Leasing is based on a shift from a volume based payment (e.g. $/t of chemical) to a benefit oriented payment (e.g. $/m2 cleaned surface). Table 2 provides examples of possible units of payment in different industry sectors and processes.

Table 2. Possible units of payment for different processes

Categories of chemicals

Processes

Possible unit of payment

Sectors/Subsectors

Adhesives

Packaging/Bonding

Number of bonded pieces
Bonded square meters

Food and beverage sector
Construction of buildings (e.g. for bonding of windows)
Manufacture of footwear
Manufacture of wood products

As the table illustrates, in some cases the unit of payment may be based on the operating hours (working time) of equipment rather than on the direct services rendered by the chemicals. For example, in the production of metal parts, there are many parts with different shapes and sizes. It would be difficult to apply as a unit of payment the number or surface area of cleaned parts, and would make more sense to relate the unit of payment to operating/working hours.

Picture 2: Different sizes and shapes of metal parts

Once the chemicals and units of payments are pre-defined, it is essential to check which measurement devices, equipment, and/or information are required to measure, monitor and verify these units of payment. In some cases, several options are possible. The supplier should be able to check whether actual results/outputs correspond to reported figures.

For the lubrication process of a packaging conveyor, the unit of payment could be the number of working hours of the conveyer but also the number of packed bottles. To monitor the number of working hours, the supplier could install a counter on the packaging line (see Picture 3). To monitor the number of packed bottles, the supplier would need to have access to the production company’s database, to check how many bottles were produced.Picture 3: A counter on the production line